• The U.S. Federal Reserve’s balance sheet has grown by nearly $393 billion in the past two weeks, reaching $8.734 trillion.
• This coincides with Bitcoin’s (BTC) price rallying 5.5% toward $29,000 as speculations of quantitative easing (QE) increase.
• However, the Fed did not use new dollar reserves to purchase long-term Treasurys, suggesting quantitative tightening is still in place to curb inflation.
U.S. Federal Reserve Balance Sheet
As of March 22, the United States Federal Reserve’s balance sheet has surged by nearly $94.5 billion — a $297 billion increase from the last week when the banking crisis started — reaching a total liabilities of $8.734 trillion which is closer to its all-time high of $8.95 trillion a year ago when the Fed started its quantitative tightening program and reduced its assets by $600 billion .
Quantitative Easing Speculations Boost Bitcoin Price
The rise in Bitcoin’s (BTC) price to nearly $29,000 occurred amid speculations that the Fed’s expanding balance sheet results from quantitative easing (QE). On the other hand, the Fed’s balance sheet grew because it dispatched short-term loans to regional and offshore banks via its brand new Bank Term Funding Program (BTFP) and its swaps facility that provides liquidity to offshore banks respectively with an allocation of approximately $42 billion and $60 billion .
US Dollar Index Strengthens
Interestingly enough, as of March 24th 2020, US Dollar index gained 1.5% since Fed’s balance update pushing BTC/USD daily price lower in short term due to increased valuation versus other top foreign currencies .
Banking Crisis Has Not Peaked Yet?
DespiteFed’s emergence with an injection of around$393 Billion into banking sector credit crisis may not have peaked yet due to potential riskof drying up cash liquidity if further measures are taken such as reducing usage of “discount window” or increasing lending facilities for regional offshore banks .
Will Bitcoin Price Reach 40K?
It is hardto predict whether this surgein Fed’s liabilities will send Bitcoinprice towards 40K mark however considering recent market movements it would be safe to assume that any further increase in US central bank’s liabilities could create an upside scenario for BTCprice .